It is important to recognize and understand that if you ever find yourself in such a situation your credit score is probably very low. Thus it will be extremely challenging obtaining the best interest rates for any financing (if you even qualify). At the same token, a lot of the very small debt out there (under $1,000.00) ends up on the debtor’s credit report, ends up in collections, but does *not* end up in a lawsuit. While I do not encourage debtors to avoid paying their bills, it is also clear that one may not be in a position where the debtor can legitimately afford to pay the delinquent bills. The negative lines on a credit report will slowly age, have less impact on the credit score, and after 7 years they will come off altogether.
If one happens to have any particular debt that is significantly over $1,000.00, then there is the possibility of being sued for that debt.
If you ever find yourself in such a situation, it is strongly recommended that you keep track of all debt collection calls that are made to you or anyone else. Most consumers are unaware, that they has debt collection rights. You can download a debt collection call log from my law firm’s website to help keep track of callers. Also, whatever debt collection mail that is received should be reviewed by an attorney. Keep in mind that often times debt collection letters have violations in them, and the consumers are really not knowledgeable enough to notice. Also keep in mind that most consumer rights lawyers will not charge an un front fee to handle debt collection abuse; federal and state laws allow consumers to collect their attorneys’ fees from the “bad guys.”
You should obtain a copy of your credit reports. They are available for free, once every year through www.AnnualCreditReport.com. It will enable you to have a complete picture of your debt.
Here are some additional suggestions to bear in mind:
1. Do not ignore the collection letters. Keep them; share them with a consumer right’s lawyer. You are welcome to send them all to my office so that I can advise further.
2. Sometimes it is worth considering calling the debt collection agencies to possibly work out a payment plan, but only after you have shared the collection letters with an attorney in the field of consumer rights. It is important to understand that sometimes paying one collector will open a jar of worms with others who are constantly looking at your credit report and probably wondering, “why is this person paying that debt, and not this one?”
3. $10k worth of debt is probably not enough to make bankruptcy the best option.
4. Bill consolidations is hardly ever the best way to go. Nevertheless, one should consult with an attorney to determine whether the debts may ultimately end up in litigation. If that’s the case, then debt consolidation may operate to prevent an imminent lawsuit.
This information is provided for educational purposes only. There is no attorney-client relationship with Karni Law Firm until a contract is signed by the attorney and the client.